🎓CFA Final Prep All Topics

Governance Risks and Benefits

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Question

What is the analyst concern when a firm has poor governance and legal or regulatory non-compliance?

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Answer

Fines, sanctions, and reputational damage can impair firm value.

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Question

Why does effective governance improve access to capital markets?

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Answer

It increases investor confidence and supports favorable issuance terms.

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Question

How is effective corporate governance linked to stronger firm performance?

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Answer

It supports better long-term financial returns.

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Question

Why can stronger governance improve operational efficiency?

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Answer

It improves decision-making and reduces waste.

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